two-sector endogenous growth model

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A model where two kinds of capital goods, physical capital and human capital, are produced in different sectors. In a standard set-up with a Cobb–Douglas production function in each sector the two production activities each exhibit constant returns to scale in the quantities of the two capital inputs. Hence, the model displays endogenous steady-state growth, where consumption, output, the stock of physical capital, and the stock of human capital all grow at the same constant rate.

Subjects: Economics.

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